VT quits shipbuilding with sale of £380m stake to BAE

VT Group will quit the shipbuilding industry with the sale of its stake in BVT
Surface Fleet to joint-venture partner BAE Systems for at least £380m.

By Amy Wilson

5:53PM GMT 28 Jan 2009

The Southampton-based company has a 45pc stake in the business, which builds warships for the Royal Navy and for export. BVT Surface Fleet employs 7,000 people and has shipyards in Glasgow, Portsmouth and Filton, near Bristol.

VT now plans to focus on its services business, which is involved in a wide range of industries from engineering consultancy and installing IT systems on warships, to training courses in schools.

BAE and VT struck the joint venture agreement in July 2007, and the option for VT to sell any time one year after that was written into the contract. BAE said VT's decision to sell the stake was "in line" with its expectations for the business.

VT said it has the approval of the Ministry of Defence and aims to sell the stake by July 1.

Rear Admiral Bob Love, the official in charge of the Navy's shipbuilding programme, said the sale of VT's stake would not affect the planned building of new destroyers and aircraft carriers.

Speaking on board the HMS Daring, the £1bn stealth destroyer which is Britain's newest warship, he told the Reuters news agency that BVT would meet its target of saving between £700m and £1.2bn over 15 years.

Shares of VT slipped 1½ to 596½p while BAE slipped 1 to 403p.

BAE chief executive Ian King said earlier this month the £4bn project to build two aircraft carriers for the Navy will go ahead, despite a two-year delay announced by the Government. Tens of thousands of jobs depend on the contract at a time of rapidly rising unemployment, industry insiders said.